Sanderson Farms under pressure as White House attacks meat consolidation

White House says it will take “bold action to enforce the antitrust laws, boost competition in meat-processing”
Shares of Sanderson Farms (SAFM) are under pressure on Wednesday after the White House blamed rising meat prices on a lack of competition in processing. “The President understands that families have been facing higher prices at the grocery store recently. Half of those recent increases are from meat prices-specifically, beef, pork, and poultry. While factors like increased consumer demand have played a role, the price increases are also driven by a lack of competition at a key bottleneck point in the meat supply chain: meat-processing,” the White House said in a blog post.

LACK OF PROCESSING COMPETITION: The White House said in a blog post, “The President understands that families have been facing higher prices at the grocery store recently. Half of those recent increases are from meat prices-specifically, beef, pork, and poultry. While factors like increased consumer demand have played a role, the price increases are also driven by a lack of competition at a key bottleneck point in the meat supply chain: meat-processing. Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic. That’s why the Biden-Harris Administration is taking bold action to enforce the antitrust laws, boost competition in meat-processing, and push back on pandemic profiteering that is hurting consumers, farmers, and ranchers across the country.” The White House noted that JBS (JBSAY) provided $2.3B in dividends and share buybacks in 2020 while Tyson Foods (TSN) recently raised dividends by 6% for fiscal year 2021.

WHAT’S NOTABLE: It was previously disclosed in a regulatory filing that on August 12, 2021, JBS Brazil delivered to the board of directors of Pilgrim’s Pride (PPC) a letter setting forth a proposal to acquire all of the outstanding shares of common stock that are not owned by JBS Brazil or its subsidiaries for a purchase price of $26.50 per share in cash. “JBS Brazil indicated in the proposal that it expects that a fully empowered special committee of independent and disinterested directors appointed by [Pilgrim’s] Board will consider the proposal and make a recommendation to the company’s Board.

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